The accompanying unaudited condensed consolidated financial statements of Evans & Sutherland Computer Corporation and subsidiaries (collectively, the “Company” or “E&S”) have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flows, in conformity with U.S. generally accepted accounting principles (“US GAAP”). This report on Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2018.
Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09,
Revenue from Contracts with Customers (Topic 606)
. In accordance with Topic 606, the Company recognizes revenue at a point of time or over the time of performance depending on the nature of the obligation.
Contract Balances
The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of June 28, 2019:
|
June 28,
2019
|
December 31,
2018
|
|
|
|
Receivables reported as accounts receivable, net
|
$
2,452
|
$
3,250
|
Contract revenue in excess of billings
|
3,705
|
3,484
|
Billings in excess of contract revenue
|
3,713
|
5,959
|
10
Significant changes in the contract assets and the contract liabilities balances during the period are as follows:
|
Contract Assets
|
Contract Liabilities
|
|
|
|
Revenue recognized that was included in the contract liability balance at the beginning of the period
|
|
$
(3,887)
|
|
|
|
Increases due to amounts billed to customers, excluding amounts recognized as revenue during the period
|
|
$ 1,641
|
|
|
|
Transferred to receivables from contract assets recognized at the beginning of the period
|
$
(2,656)
|
|
|
|
|
Increases as a result of revenue recognized, excluding amounts transferred to receivables during the period
|
$ 2,877
|
|
Contract assets arise when revenue recognized on a contract exceeds the cumulative progress billings. Contracts generally provide for an enforceable right to payment for performance completed to date but do not necessarily have a present right to consideration payment for performance completed until the event that triggers the progress billing. The contract assets are transferred to the receivables when the rights to payment occur and amounts are billed. Contract liabilities arise when progress billings on a contract exceed the revenue recognized. Contract liabilities are relieved as the performance obligation is completed and revenue is recognized. Progress billings vary among contracts and can be triggered by chronological milestones, performance events or other various measurements of performance.
Backlog of Remaining Customer Performance Obligations
The following table includes estimated revenue expected to be recognized and recorded as sales in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.
|
|
Remainder of 2019
|
2020
|
2021
|
2022
|
2023
|
|
|
|
|
|
|
|
Sales
|
|
$
9,431
|
$
2,982
|
$
400
|
$
116
|
$
95
|
3. OPERATING LEASE
The Company leases its office, shop and warehouse space in Salt Lake City, Utah under a non-cancellable operating lease agreement. The lease agreement had an amended term set to expire October 2019 (the “
Previous Facility Lease”). On April 15, 2019, the Company signed an amendment to the Previous Facility Lease (the “Lease Amendment”).
The Lease Amendment effectively terminated, as of April 30, 2019, the Previous Facility Lease, and revised the terms whereby, effective May 1, 2019, the Company continues to lease 60% of the space, while the other 40% is leased from the Landlord by a third-party tenant (“New Facility Lease”). The Company continues to pay 100% of the maintenance and utility costs for the buildings and grounds, of which approximately 40% is reimbursed by the third-party tenant in accordance with terms set by the New Facility Lease. The New Facility Lease has seven
year term with two five-year renewal options with monthly base rent of $35 during the first year with a 3% escalation per year.
As a result of the adoption of ASC 842, the Company recognized an operating lease liability with a corresponding right-of-use (“ROU”) asset of the same amount based on the
present value of the minimum rental payments of the Previous Facility Lease as of January 1, 2018. The discount rate used to compute the present value of the minimum
11
rental payments of the Previous Facility Lease is the Company’s estimated borrowing rate of 7.5% as of the inception of the term of the Previous Facility Lease. The operating lease expense was computed on the straight-line basis which amounted to $289 reported as rent expense in the six-month periods ended June 28, 2018 and $183 for the first four months of 2019 through the April 30, 2019 termination of the Previous Facility Lease.
For the New Facility Lease, the Company recognized an operating lease liability in the amount of $2,678 and a ROU asset in the amount of $2,742 as of May 1, 2019. The operating lease liability consists of the present value of the minimum rental payments of the New Facility Lease. The discount rate used to compute the present value of the minimum rental payments of the New Facility Lease is the Company’s estimated current borrowing rate of 5.25%. The ROU asset consists of the lease liability plus an indirect cost of $44 attributable to negotiating and arranging the lease. The operating lease expense is computed on the straight-line basis which amounts to $78 reported as rent expense for the final two months of the period ended June 28, 2019.
Balance sheet information related to Previous Facility Lease and New Facility Lease are as follows:
The components of lease expense are as follows:
|
|
|
June 28,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Operating lease right-of-use asset
|
|
|
$
|
2,675
|
|
$
|
187
|
Operating lease liability, current portion
|
|
|
|
293
|
|
|
188
|
Operating lease liability, net of current portion
|
|
|
|
2,347
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of lease expense are as follows:
|
|
|
|
|
|
|
|
|
|
|
June 28,
|
|
June 29,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Amortization of right-of-use asset recorded as rent expense
|
|
|
$
|
246
|
|
$
|
270
|
Interest on lease liability included in other expense
|
|
|
|
15
|
|
|
19
|
Total lease cost
|
|
|
$
|
261
|
|
$
|
289
|
Maturities of the lease liability for the twelve months ended June 28, 2019 are as follows:
Future Minimum Lease Payments
|
|
|
|
|
|
|
|
2020
|
|
|
|
|
$
|
424
|
2021
|
|
|
|
|
|
437
|
2022
|
|
|
|
|
|
450
|
2023
|
|
|
|
|
|
464
|
2024
|
|
|
|
|
|
478
|
Thereafter
|
|
|
|
|
|
912
|
Total future minimum lease payments
|
|
|
|
|
$
|
3,165
|
Less: amount representing interest
|
|
|
|
|
|
(525)
|
Present value of future payments
|
|
|
|
|
$
|
2,640
|
Current portion
|
|
|
|
|
|
293
|
Long-term portion
|
|
|
|
|
|
2,347
|
12
Other information related to the lease:
|
|
|
June 28,
|
|
June 29,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Operating cashflows
|
|
|
|
|
|
|
|
Cash paid related to operating lease obligation
|
|
|
$
|
248
|
|
$
|
281
|
Remaining lease term (in years)
|
|
|
|
|
|
|
|
Operating lease
|
|
|
|
6.8
|
|
|
0.8
|
|
|
|
|
|
|
|
|
Weighted average discount rate
|
|
|
|
|
|
|
|
Operating lease
|
|
|
|
|
|
|
|
4. CHANGES IN ACCOUNTING PRINCIPAL
As described in Note 3, the Company adopted Topic 842
Leases
, effective January 1, 2019 resulting in the retrospective adjustment of the comparative 2018 periods presented. Prior to the application of Topic 842, the rent expense was recorded in the amount of the lease payments, adjusted on straight-line basis over the lease term, less the amortization of a deferred gain from a 2014 sale leaseback transaction. Under Topic 842, this gain would be recognized at the time of the transaction and not deferred. As a result, there was an adjustment to eliminate the unamortized balance of the deferred gain for cumulative effect of the initial application which increased the opening balance of stockholders’ equity in the amount of $808 at January 1, 2018. The presented condensed consolidated statement of operations and condensed consolidated statement of cash flows for the six-month period ended June 29, 2018 is adjusted to reflect an increase in rent expense in the amount of $220. The balance sheet presented as of December 31, 2018 is adjusted to reflect the ROU asset and operating lease liability described in Note 3 along with an increase in stockholders’ equity of $369.
5.
STOCK OPTION PLAN
As of June 28, 2019, options to purchase 876,581 shares of common stock under the Company’s stock option plan were authorized and reserved for future grant.
A summary of activity in the stock option plan for the six months ended June 28, 2019 follows (shares in thousands):
|
|
|
Weighted-
|
|
|
|
Average
|
|
Number
|
|
Exercise
|
|
of Shares
|
|
Price
|
|
|
|
|
|
Outstanding as of beginning of the period
|
1,597
|
|
$
|
0.65
|
Granted
|
165
|
|
|
0.80
|
Exercised
|
(130)
|
|
|
0.17
|
Forfeited or expired
|
(40)
|
|
|
0.66
|
Outstanding as of end of the period
|
1,592
|
|
|
0.71
|
|
|
|
|
|
Exercisable as of end of the period
|
1,523
|
|
$
|
0.61
|
As of June 28, 2019, options exercisable and options outstanding had a weighted average remaining contractual term of 5.5 and 6.3 years, respectively, and had an aggregate intrinsic value of $341.
13
The Black-Scholes option-pricing model is used to estimate the fair value of options under the Company’s stock option plan. The weighted average values of employee stock options granted under the stock option plan, as well as the weighted average assumptions used in calculating these values during the first six months of 2019, were based on estimates as of the date of grant as follows:
Risk-free interest rate
|
2.64%
|
Dividend yield
|
0.00%
|
Volatility
|
81.15%
|
Expected life
|
3.5 years
|
Expected option life and volatility are based on historical data. The risk-free interest rate is calculated based on the average US Treasury bill rate that corresponds with the option life. Historically, the Company has not declared dividends and there are no foreseeable plans to do so.
The options exercised in the six-month period ended June 28, 2019 had an intrinsic value of $69.
As of June 28, 2019, there was approximately $99 of total unrecognized share-based compensation cost related to grants under the stock option plan that will be recognized over a weighted-average period of 2.2 years.
Share-based compensation expense included in selling, general and administrative expense in the statements of operations for the six-month periods ended June 28, 2019 and June 29, 2018 was $49 and $46, respectively.
6.
EMPLOYEE RETIREMENT BENEFIT PLANS
Pension and Retirement Obligations
In 2015, the Company terminated a defined pension plan and settled the resulting liabilities in exchange for a fixed obligation secured by the Company’s assets (the “Pension Settlement Obligation”). The remaining payments due under the Pension Settlement Obligation consist of eight installments of $750 to the Pension Benefit Guaranty Corporation due annually on October 31. The Pension Settlement Obligation is recorded net of imputed interest expense at 7%, as a liability on the balance sheet.
The Company’s only remaining pension obligation is the Supplemental Executive Retirement Plan (“SERP”).
Employer Contributions
The Company is not currently required to fund the SERP. All benefit payments are made by the Company directly to those who receive benefits from the SERP. As such, these payments are treated as both contributions and benefits paid for reporting purposes. The Company expects to contribute and pay SERP benefits of approximately $656 in the next 12 months.
Components of Net Periodic Benefit Expense
|
Supplemental Executive
|
|
Retirement Plan
|
|
June 28,
|
|
June 29,
|
For the six months ended:
|
2019
|
|
2018
|
|
|
|
|
|
|
Interest cost
|
$
|
73
|
|
$
|
68
|
Amortization of actuarial loss
|
|
40
|
|
|
40
|
Net periodic benefit expense
|
$
|
113
|
|
$
|
108
|
14
|
Supplemental Executive
|
|
Retirement Plan
|
|
June 28,
|
|
June 29,
|
For the three months ended:
|
2019
|
|
2018
|
|
|
|
|
|
|
Interest cost
|
$
|
36
|
|
$
|
34
|
Amortization of actuarial loss
|
|
20
|
|
|
20
|
Net periodic benefit expense
|
$
|
56
|
|
$
|
54
|
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes of Evans & Sutherland Computer Corporation and subsidiaries (collectively, the “Company,” “E&S,” “we,” “us” and “our”) included in Item 1 of Part I of this quarterly report on Form 10-Q. In addition to the historical information contained herein, this quarterly report on Form 10-Q includes certain "forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the fact they use words such as “should,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements are likely to relate to, among other things, the Company’s goals, plans and projections regarding its financial position, results of operations, cash flows, market position, product development, sales efforts, expenses, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings and financial results, which are based on current expectations that involve inherent risks and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years.
Although the Company believes it has been prudent in its plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The Company undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.
All dollar amounts are in thousands.
EXECUTIVE SUMMARY
As described in the notes to the condensed consolidated financial statements, the Company adopted Topic 842,
Leases,
with a date of the initial application of January 1, 2018. The Company applied Topic 842 by retrospectively adjusting the 2018 financial statements presented for comparison in this Form 10-Q. The retrospective adjustment increased the rent expense by $110 per quarter. The balance sheet effect of this increase in expense was offset by an adjustment for the cumulative effect of the application that resulted in a net increase to stockholders’ equity of $369 as of December 31, 2018.
The results for the second quarter of 2019 produced net income of $203 on sales of $8,006 compared to net income of $509 on sales of $8,872 for the comparable period of 2018, as adjusted for the application of Topic 842 described above. The results for the first six months of 2019 produced a net loss of $440 on sales of $15,171 compared to net income of $438 on sales of $16,453 for the comparable adjusted period of 2018. Sales for 2019 were lower due to the acceleration of customer deliveries in 2018 and a low volume of new customer orders. Improved profit margins in 2019 were mostly offset by higher operating expenses in 2019. The higher profit margins were attributable to actual cost on some completed contracts being lower than previously estimated costs. This was mainly due to the
15
successful completion of some more challenging projects without incurring the estimated contingency costs for uncertainties. Operating expenses in 2019 were higher than 2018 due to $457 of bad debt expense recorded in the second quarter of 2019 as a result of an increase in the allowance for doubtful accounts receivable for a customer in China. The Company is evaluating possible collection efforts but has determined that collection is doubtful at the time of filing. Although disappointed by the loss, the Company was encouraged by the strong gross profit in the second quarter of 2019. The Company believes the increase in bad debt expense is an isolated occurrence.
The low volume of new customer orders decreased the sales backlog to $13,024 as of June 28, 2019 compared to $17,366 as of December 31, 2018. New orders to replenish the sales backlog will be critical to produce sales at sufficient levels for profitable results. We remain encouraged that the Company’s sales prospects will produce sufficient orders to sustain sales at profitable levels over the long term; however, we anticipate that the low backlog as of June 28, 2019 could continue to challenge profitability in 2019. Notwithstanding the loss in the first half of 2019, profitable results over the past few years have strengthened the Company’s financial position. This presents an opportunity in periods of low sales to redirect staff and resources, which would otherwise be working on customer projects, toward research and development activities to expand our products for future sales growth.
The Company continually evaluates its business for opportunities to reduce operating costs. These efforts led the Company to amend the lease for its facility in Salt Lake City effective May 1, 2019. Prior to the amendment the Company occupied 100% of two buildings totaling approximately 68,000 square feet. Upon review of its current requirements, the Company determined that its operations could be served efficiently with approximately 60% of its currently leased space. Under the Lease Amendment, effective May 1, 2019, the Company leases approximately 60% of the prior leased space, while the other 40% is leased from the Landlord by a third-party tenant. The initial annual rent payments are reduced $148 annually. Also, the Company estimates that’s its utility and maintenance costs will be reduced by about $200 for a total estimated annual cost reduction of approximately $348.
CRITICAL ACCOUNTING POLICIES
Certain accounting policies are considered by management to be critical to an understanding of our condensed consolidated financial statements. Their application requires significant management judgment, with financial reporting results relying on estimates about the effect of matters that are inherently uncertain. A summary of critical accounting policies can be found in our Form 10-K for the year ended December 31, 2018. For all of these policies, management cautions that future results rarely develop exactly as forecasted, and the best estimates routinely require modification.
RESULTS OF OPERATIONS
Sales and Backlog
The following table summarizes our sales:
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 28,
|
|
June 29,
|
|
June 28,
|
|
June 29,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
8,006
|
|
$
|
8,872
|
|
$
|
15,171
|
|
$
|
16,453
|
The lower sales in 2019 were attributable to the acceleration of customer deliveries in 2018 and a low volume of new customer orders.
Revenue backlog decreased to $13,024 as of June 28, 2019, compared to $17,366 as of December 31, 2018. The decrease in the revenue backlog was mainly attributable to the high volume of sales from work on prior customer orders combined with a low volume of new orders booked in the first six months of 2019.
16
Gross Profit
The following table summarizes our gross profit and the gross profit as a percentage of total sales:
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 28,
|
|
June 29,
|
|
June 28,
|
|
June 29,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
3,389
|
|
$
|
3,148
|
|
$
|
5,593
|
|
$
|
5,757
|
Gross profit percentage
|
|
|
42%
|
|
|
35%
|
|
|
37%
|
|
|
35%
|
The mix of products delivered and the types of customer contracts that contributed to the revenue in the periods presented, causes variability in the gross profit percentage. Also, in the second quarter of 2019, several projects were completed at costs lower than estimated as efforts to meet some customized product features and uncertain site conditions were less than anticipated. This improved 2019 gross profit and offset higher fixed overhead cost as a percentage of the lower 2019 sales.
Operating Expenses
The following table summarizes our operating expenses:
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 28,
|
|
June 29,
|
|
June 28,
|
|
June 29,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
$
|
2,200
|
|
$
|
1,712
|
|
$
|
4,017
|
|
$
|
3,485
|
Research and development
|
|
|
834
|
|
|
753
|
|
|
1,736
|
|
|
1,520
|
Pension
|
|
|
56
|
|
|
54
|
|
|
113
|
|
|
108
|
Total operating expense
|
|
$
|
3,090
|
|
$
|
2,519
|
|
$
|
5,866
|
|
$
|
5,113
|
Selling, general and administrative expenses were higher in 2019 compared to 2018, mainly due to a bad debt charge of $457 for a customer receivable in China.
Research and development expenses were higher in 2019 due to the deployment of more engineering resources to R&D activities made possible by lower customer delivery activities. Research and development expenses generally vary with use of engineering resources for product improvement projects and customer delivery activities.
Pension expense increased slightly in 2019 compared to 2018 due to an increase in the interest cost on the SERP.
Other Expense, net
The following table summarizes our other expense:
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 28,
|
|
June 29,
|
|
June 28,
|
|
June 29,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net
|
|
$
|
(77)
|
|
$
|
(100)
|
|
$
|
(148)
|
|
$
|
(175)
|
Other expense decreased in 2019 compared to 2018 mainly due to declining interest expense on the Pension Settlement Obligation and mortgage notes along with an increase in interest income from higher rates on temporary cash investments.
17
LIQUIDITY AND CAPITAL RESOURCES
Outlook
As discussed above in the executive summary, we believe existing liquidity resources and funds generated from forecasted revenue will be sufficient to meet our current and long-term obligations. We continue to operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures.
Cash Flows
In the first six months of 2019, $1,556 of cash used in operating activities was attributable to $410 of cash from the net loss for the period, after the effect of non-cash items of $850, and cash used by changes to working capital of $1,966. The significant uses of cash from changes to working capital were a decrease in accounts payable and a decrease in billings in excess of contract revenue. This was partially offset by a decrease in accounts receivable and a decrease in inventory. These changes are attributable to the timing of billings, customer payments and new customer orders.
In the first six months of 2018, $137 of cash provided by operating activities was attributable to $1,119 of cash provided by the net income for the period, after the effect of non-cash items of $681 which was offset by cash used by changes to working capital of $982. The significant uses of cash from changes to working capital were increases in accounts receivable, contract revenue in excess of billings and inventory with a decrease in accounts payable. This was mostly offset by an increase in billings in excess of contract revenue resulting from advance billings to customers. These changes are attributable to the timing of billings, customer payments and new customer orders.
Cash used in investing activities was $68 for the six months ended June 28, 2019 compared to $56 for the same period of 2018. Investing activities for both periods presented consisted of property and equipment purchases. In 2018 investing activities included proceeds from the sale of equipment no longer being used.
For the six months ended June 28, 2019, financing activities used $96 of cash compared to $110 in 2018 for principal payments on mortgage notes. Proceeds of $21 for the sale of common stock pursuant to the exercise of employee stock options partially offset the principal payments on the mortgage notes in 2019.
Line of Credit
The Company is a party to a line-of-credit agreement with a commercial bank which permits borrowings of up to $1,100 to fund the working capital requirements of Spitz. Under the line of credit agreement, interest is charged on amounts borrowed at the lender’s prime rate less 0.25%. Any borrowings under the Credit Agreement are secured by Spitz real and personal property and all of the outstanding shares of Spitz common stock. The line-of-credit agreement and mortgage notes (with the same commercial bank) contain cross default provisions whereby a default on either agreement will result in a default on both agreements. There were no borrowings outstanding under the line-of-credit agreement as of June 28, 2019.
Letters of Credit
Under
the terms of financing arrangements for letters of credit, the Company is required to maintain a balance in a specific cash account equal to or greater than the outstanding value of all letters of credit issued, plus other amounts necessary to adequately secure obligations with the financial institutions who issue the letters of credit. As of June 28, 2019, there were outstanding letters of credit and bank guarantees of $252, most of which are scheduled to expire during the year ending December 31, 2019.
Mortgage Notes
As of June 28, 2019, Spitz had obligations totaling $1,423 under its two mortgage notes payable.
18
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective at the reasonable assurance level such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company are detected.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation of disclosure controls and procedures discussed above that occurred during the six months ended June 28, 2019, or subsequent to that date, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.
PART II - OTHER INFORMATION
Item 1.
LEGAL PROCEEDINGS
In the normal course of business, we become involved in various legal proceedings. Although the final outcome of such proceedings cannot be predicted with certainty, we believe the ultimate disposition of any such proceedings will not have a material adverse effect on our consolidated financial position, liquidity, or results of operations.
Item 6.
EXHIBITS
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, filed herewith.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, filed herewith.
32.1
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101
The following materials from this Quarterly Report on Form 10-Q for the period ended June 28, 2019, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
EVANS & SUTHERLAND COMPUTER CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
August 7, 2019
|
By:
/s/ Paul Dailey
|
|
|
Paul Dailey, Chief Financial Officer
|
|
|
and Corporate Secretary
|
|
|
(Authorized Officer)
|
|
|
(Principal Financial and Accounting Officer)
|
20